dmainboss:

So if I just cook up something now that Nigeria has invaded Cameroun, you will say there must be an element of truth in it? We live in an evil world. People lie and deceive when they want to. It is not rocket science. If you really think guys in Saharareporters cares about you or Nigeria, you must be deluding yourself. Nigerian politicians are very bad but what really irks me is that the people that should provide the checks and balance are even the most corrupt. Including, the judiciary, press and civil society groups. I have worked with many civil society groups and they are nothing but Ghana must go groups. Its sickening.


Saharareporters are a soft sell and gossip online magazine.

Good day sir. I must say you are still very stu.pid even after 2 weeks, you are still biased and stu.pid. I am sorry to say sir

Now this are fact because I have members in Aramco oil in saudi araba

1. The cost of regfining a Barrel of oil is less than 5 dollars.

2. A barrel of oil is 168 Liters of oil

3. This cost is plus, the maintaince, cost of labour, cost of energy in form of heat, cost of chemicals etc

4. Now convert 5 dollars to naira is 750 naira for 168 liters = 4 naira per liter

what does that tell you, u ideeiot

dmainboss:

You are a funny guy, really! What 40 head start? Have you been living in Ukraine? We are on minus headstart! With refineries nearing 40 years and no proper turn around for same period, you say we have a headstart? You must be in dreamland. The truth is, it might be cheaper to actually start from scrath right now than to rely on the silly infrastructure we have! Haba!!

It's not your fault,  It's the people who sent you that i blame, but i continue to pray to the Almighty that you all and your children will reap what you have sown and hopefully Nigerians as a whole get a glimpse of it.

Is it that no one here realizes that the statement quoted below is patently false and embarassing to whoever came up with long write-up of flowery nonsense?

At the refinery gate in Port Harcourt, the cost of a barrel of Qua Iboe crude oil is made up of the finding /development cost ($3.5/bbl) and a production/storage /transportation cost of $1.50 per barrel.
 
Thus, at $5 per barrel, we can get Nigerian Qua Iboe crude to the refining gates at Port Harcourt and Warri.

If you look at how long that write-up is, you'll think the guy knows what he's talking about! Naija people sha!what the guy posted as price of oil is the OPEX per barrel produced in Nigeria and even that was for before 2003. Since the Niger Delta crisis OPEX per barrel is closer to $10 per barrel. That is an aside anyway. The price of crude going to the refineries today is what obtains internationally which is more than $100 per barrel. The crude sold to the refineries used to be subsidised but not anymore. In essence, all those calculations have the wrong basis.

Please note that I'm not expressing an opinion on the subsidy, just pointing out the falsehood in those calculations.

alj_harem:


Good day sir. I must say you are still very stu.pid even after 2 weeks, you are still biased and stu.pid. I am sorry to say sir

Now this are fact because I have members in Aramco oil in saudi araba

1. The cost of regfining a Barrel of oil is less than 5 dollars.

2. A barrel of oil is 168 Liters of oil

3. This cost is plus, the maintaince, cost of labour, cost of energy in form of heat, cost of chemicals etc

4. Now convert 5 dollars to naira is 750 naira for 168 liters = 4 naira per liter

what does that tell you, u ideeiot

I would have ignored your foolishness, but just to expose your idiocy, I will respond. First I will repost the link I posted before. It is only ignorantly mischievious people like you that try to tell us what your so called infromant in Aramco Saudi told you. That is just funny

http://www.nationmaster.com/graph/ene_gas_pri-energy-gasoline-prices


http://www.kiplinger.com/features/archives/gas-prices-around-the-world.html

Below are prices for 2005 so you can also compare:

http://money.cnn.com/pf/features/lists/global_gasprices/


These are world oil prices from different countries including a link for prices in 2005. If it cost $5 to produce a barrel (168 litres), why do countries of the world including Saudi sell at the prices listed. That will be approx $0.03 (or around N4.5) to produce a litre. And Saudi sells at $0.61. That will be 20 times above its production cost according to your claims. Which effectively means they aint subsidizing fuel. And the report clearly says it is subsidized.  You are making a fool of yourself by quoting what a so called informant  told you compared to official information. I am ashamed of you and who is the idi.ot  now?

dmainboss:

Did the current government put Nigeria in this predicament? We got where we are under military rule. Just like Ghana found themselves before democracy took over. So whats your point? The present government inherited the mess. Do you think if Ghana had been producing oil during their military era and subsidizing fuel, they would not have removed it after the civilians took over?

Just to correct that it is not only about building infrastructure. The subsidy right now is actually being funded from borrowed funds. that is living dangerously. Nigeria is spending money it doesnt have.

After 10 yrs of civil rule u are still blaming the military for where we are?

Are u conversant with the history of Rwanda and how genocide wiped out everything called infrastructure in that country?
Do u know that at this moment after few yrs of peace and good leadership that Rwanda have working and  far better infrastructure than Nigeria?
When you assume a role, do u take only the assets and not the liabilities as well?
Whether or not military dabaruled the whole thing, what effort has civil govts done to right the wrongs without adding salt to injury?

The truth is I simply can't trust someone that intend spending a billion naira on his  food next yr with funds that will come in additionally after the sudsidy removal. No to fuel subsidy removal at least for now.

The argument that a litre of Petrol costs N39.50 is a ridiculous analysis aimed at deceivng the people by  the same cartel who are benefiting from the corruption embedded in the susbisdy. The argumentt  is based on a premise that the current allocation of 450,000metric of  crude oil to the NNPC for local refining and international swap should be considered free by the federal Government and only refining fees should be charged.  how on earth can anyone in their right frame of mind think that 450,000 barrels of oil at $108(current price of Brent) and for 365 days should be burnt up on our roads in the name of fuel subsidy , benefitted by the middle class (with their fuel guzzling jeeps and generators) and the rich(the smugglers and rent seekers) when we can sell same and use them to address our more urgent national infracstructure needs.

This is the link to the analysis http://www.ngrguardiannews.com/index.php?option=com_content&view=article&id=71968:the-cost-of-one-litre-of-petrol&catid=72:focus&Itemid=598

@ Goggs, good observation from your post but crude oil has about 5 other marketable components such as diesel, lubricating oil, paraffin wax , bitumen etc how do we quantify these other products? It's obvious that Nigerian government are rationalising the truth.

If it's from sahara, then is not credible! Period!

^^^Gbam. Its not rocket science, really1

Diligence:

If it's from sahara, then is not credible! Period!

Did u read the opening thread? Which of these articles was written by Sahara? Abi Av u seen something I havent?

^^^

To know how the price was arrived at, please read this article http://saharareporters.com/article/real-cost-nigeria-petrol-dr-izielen-agbon

dmainboss:

^^^

The writer of the article is Dr agbon. Is he part of Sahara reporters shareholders

Now to all my true brothers and sisters, understanding the price of petrol is not rocket science and doesn't take a phd. The authentic physical cost of petrol remains the costs of all that is needed to bring what God has given us in our land, to the fueling stations- and yes after dividing that by the amount of barrels that we produce it won't take a genius to realise that it is probably less than N40. In fact any economist worth his salt will tell you that the real price of fuel would still be lower than the lowest price you have ever seen quoted for it in the international market- so lets say something like 15 dollars a barrel. So the fact that fuel is currently trading at 100 dollars plus in the international market is not the physical cost of fuel but the opportunity cost to the whole of Nigeria, note i did not say nigerian government - so we can choose to accept that price or not. Finally with a simplistic example, imagine one is a farmer and you grow the last yams in the world. There is a famine, no other food available but your yams and thus the market price is now a 1000 dollars for them- was that the physical cost you incurred in bringing forth the yams? Anyway you decide to sell them all because of greed and then realise your family is starving because their is no other food available- you go back to the market to purchase the yams and obviously you end up spending more or getting less than what you initially produced. This inefficient clueless farmer is our government, the only difference is our government does it on purpose because it despises it's family.

Now to all my true brothers and sisters, understanding the price of petrol is not rocket science and doesn't take a phd. The authentic physical cost of petrol remains the costs of all that is needed to bring what God has given us in our land, to the fueling stations- and yes after dividing that by the amount of barrels that we produce it won't take a genius to realise that it is probably less than N40. In fact any economist worth his salt will tell you that the real price of fuel would still be lower than the lowest price you have ever seen quoted for it in the international market- so lets say something like 15 dollars a barrel. So the fact that fuel is currently trading at 100 dollars plus in the international market is not the physical cost of fuel but the opportunity cost to the whole of Nigeria, note i did not say nigerian government - so we can choose to accept that price or not. Finally with a simplistic example, imagine one is a farmer and you grow the last yams in the world. There is a famine, no other food available but your yams and thus the market price is now a 1000 dollars for them- was that the physical cost you incurred in bringing forth the yams? Anyway you decide to sell them all because of greed and then realise your family is starving because their is no other food available- you go back to the market to purchase the yams and obviously you end up spending more or getting less than what you initially produced. This inefficient clueless farmer is our government, the only difference is our government does it on purpose because it despises it's family.

Our Govt. is not sincere. The cost of production is inflated. After all, was the share prices of some banks not bloated? Some one some where is benefiting from all this confusion. What is being done with the excess crude oil fund?

@samstadam you forgot to mention in your "fine" story that the farmer could not fend for his family's  needs anymore and had to borrow in the bank hoping that his unborn children would pay back the debt. you also forgot to mention that one of the farmer's children was glutonous and ate up all the portion of his brother and became mobidly obesse while his brothers were starving to death. The obesse brother is the nigerian middle class and the rich (the fuel guzzlers) while the starving brothers are the poor masses.

alj_harem:


Good day sir. I must say you are still very stu.pid even after 2 weeks, you are still biased and stu.pid. I am sorry to say sir

Now this are fact because I have members in Aramco oil in saudi araba

1. The cost of regfining a Barrel of oil is less than 5 dollars.

2. A barrel of oil is 168 Liters of oil

3. This cost is plus, the maintaince, cost of labour, cost of energy in form of heat, cost of chemicals etc

4. Now convert 5 dollars to naira is 750 naira for 168 liters = 4 naira per liter

what does that tell you, u ideeiot

You see alj_harem, this is where I fault your analysis

First off you need "Raw Materials/Raw inventory (Barrel of oil) selling for $100.00 market rate, given a 168 liter of, that's about $0.60 (N48 @160 FOREX) per liter of oil. Now given the fact that Nigeria has crude oil and sells at 1/2 the market price of $50 to local refiners, that's a $0.30 (N48 @160 FOREX) per liter.  Given the worse case scenario, 1/4 the market price of $25, i.e. is $0.15 (N24 @160 FOREX).

Keep in mind that you have allocated for the allowance for WASTE during the WIP process. Also, you haven't accounted for the cost associated with the finished goods (inventory). You have accounted for the cost disparity involved between Aramco and a local refiner, their cost aren't obviously the same due to the different forces against them. Nigerian refiners will spend a lil more than their Aramco counterparts. I mean I can continue to list cost not associated with this, something you did not mention. Therefore, unless if local refiners buys crude at 1/2 (conservative) to 1/4 (super conservative), or even 1/8 (way super conservative) along with their cost, I sure ain't seeing it.


@OP


I do believe this ONLY IF barrel of Crude is purchase at $10 to 40 per barrel for LOCAL REFINERS ONLY, give us number to work with. Now, if raw materials are purchase at market rate, the it certainly not possible for cost of petrol to be N39.50. That's just a big fat lie.

What is wrong with Nigerians. We do not buy oil we ship our
oil to be refined internationally and we pay for the refined product with oil
or cash for refining. There has never been a time in the Nigerian history that we have to buy
oil. So we don't buy at the international rate as the government claimed.

If the government claimed that they borrowed money to finance the subsidy,
so where are they getting the money for those areas they said will be improved
with the subsidy money.

The truth of the matter is that our government is not honest. Since 1991, they have talked about removing fuel subsidy to tackle smugglers, increase efficiency, improve infrastructure, eradicate corruption and what have you but there's absolutely nothing on ground to show any positive development for all price increases since then. Pray me, what was the price of fuel in 1999? With all the gradual increments, we have become worse as a Nation. Rather than see any major infrastructural development, our roads are now officially the worst in the world. How come Nigeria is the only major crude exporter in the world without functioning refineries? Yet some of our past leaders have operational refineries in other countries in order to sell refined products to us and then turn around to collect subsidy. What a shame!

Too many questions to be answered but the so called technocrats in government could not offer plausible answers. Rather, they threaten thunder and brimstone when faced with intelligent inquisitions. The other day someone was talking about "safety nets" after the removal of subsidy and I had to wonder what was meant by that loose and meaningless statement. They must think we are too dumb to ask questions!

Give us HARD facts concerning the situation on the ground and convince us that this is the best way to go by showing a clear plan and deliverables.

@sshalom,

no one is going to sit you down and dish you the information privately. There is enough out there. watch the town hall meeting on fuel subsidy removal and hear the full debate with contributions from government and civil society. it has severally been shown on channels and STV

The calculation is flawed because it doesn't recognise that the NNPC has been mandated to buy crude for its refineries at market prices.

In any case, even if the calculation was true, it would only be true for domestically produced petrol which is less than 40% of current consumption. As long as we are importing refined petrol, the actual cost is much higher than the current pump price.

Besides, if we are looking to bring in private refiners into Nigeria (which is what the government wants) why should Nigeria subsidise them by giving them crude for below market prices? What stops them from exporting this cheap petrol and making massive profits elsewhere like in Ghana?

In addition, the prices being quoted are 'net' prices - they are removing the cost of the crude from the final cost to come up with the price. This doesn't make sense because the oil is not free.

If a govt has the balls to probe IBB,then betterlife will come for the masses.

dmainboss:

I would have ignored your foolishness, but just to expose your idiocy, I will respond. First I will repost the link I posted before. It is only ignorantly mischievious people like you that try to tell us what your so called infromant in Aramco Saudi told you. That is just funny

http://www.nationmaster.com/graph/ene_gas_pri-energy-gasoline-prices


http://www.kiplinger.com/features/archives/gas-prices-around-the-world.html

Below are prices for 2005 so you can also compare:

http://money.cnn.com/pf/features/lists/global_gasprices/


These are world oil prices from different countries including a link for prices in 2005. If it cost $5 to produce a barrel (168 litres), why do countries of the world including Saudi sell at the prices listed. That will be approx $0.03 (or around N4.5) to produce a litre. And Saudi sells at $0.61. That will be 20 times above its production cost according to your claims. Which effectively means they aint subsidizing fuel. And the report clearly says it is subsidized.  You are making a fool of yourself by quoting what a so called informant  told you compared to official information. I am ashamed of you and who is the idi.ot  now?

you are just an ideeiot beclouded by bigotry that you don't mind Nigerians suffering so long as it hurts the hausa and yoruba. LOL I got news for you, YOU stu.pid would also land ur people into trouble. Ode doluwa

I can't believe we have stu.pid people such as ur self talking about Nigeria.

Now let me educate ur dumb brain ezeuche and this is the last post I would give u, YOU STU.PID IDEEIOT

1. The cost of a barrel of oil ? and who controls the prices ? with what currency ? You ODE !!! SMH

the cost of Oil is controled by OPEC which is an organisation of different oil producing countries

Now listen and listen good you half-educated mumu. This prices were set by OPCE to know the UNIVERSIAL COST PRICE OF OIL SALES TO NON-OIL PRODUCING COUNTRIES and that is why ideeiots like u look at the tv and see 131 dollars a barrel and actually believe that is the cost of a barrel of oil.

The Actual cost of a barrel of oil varies in different countries and it is around 5 dollars to do every thing (factors such as sulfur content, climate, on or off shore etc).

Now our oil is been converted to dollars money instead of naira according to the link u showed me. This means u just have brains and cannot use it.

Is it not obvoius that ours would be the lowest when converting it to dollars because of the exchange rate which is controled by the world bank ?

There was a time it was a dollar to a naira so can we say the cost of a liter of oil would be 65 dollars

what sort of young generation is this

When people like u in america cannot thing outside the box and look at things globaly it really hurt me to the bone.

smh.

the price of mining,refininig and distributing(including profit for seller) a liter of petrol should be less than 38 Naira a liter.As at 2009 a liter of fuel in Dubai without subsidy was less than 38 Naira per liter.Other UAE states were in the range of 20 -30 naira a liter.
To refine low quality petrol( which is what we mostly have in naija) is about 8 naira a liter while refining a higher grade petrol is about 12 naira a liter.adding logistics,mining and profit the price should be no where near 65 naira talkless of about 150naira which it is going to come up to if this deregulation succeeds.We are paying subsidy for transporting crude out of naija and importing fuel,we are also paying for storage,port charges and corruption.There is really nothing like fuel subsidy as a matter of logic and fact.We are only paying for the government's inefficiency

@ Lagbaja
What needs? What needs did the farmer need to borrow for that surpassess the need for food? I ask would the farmer's family die if he doesn't pay school fees or buy them new clothes? So your advice to him is to keep the money, let his family starve to death first and then educate and clothe the corpses.
And this is what people like you don't get, we are not angry about paying more for fuel, we are angry about what paying drastically more for fuel is going to do to the price of bread, garri, unemployment, a simple haircut at the barbers etc. This policy will definitely be more fatal to the majority of poor massess with overwhelmingly fixed incomes than the fairytale obese middleclass brothers that you dream about.

This is a great write-up but i have a big problem agreeing with the submission that the cost of petrol per liter is less than N40 based on the analysis. Am beginning to be shocked, am i the only person noticing this?
Check this out. I copied it from the article:

So let us conclude this basic economic exercise. If the true price of 38.2% of our petrol supply from our local refinery is N33.36/litre and the remaining 61.8% has a true price of N34.45 per litre, then the average true price is (0.382*33.36+0.618*34.45) or N34.03 per litre. The official price is N65 per litre and the true price with government figures is about N34 per litre (even with our moribund refineries).


If the true price is N33.36/litre, how can the price of the imported litre be N34.36? The margin difference is too small. It just can't be real, it doesn't add up. Won't you including cost of shipping, off-loading, handling charges etc. If you included all this costs, definitely, the imported litre should cost more than N34,36/litre.
If I therefore take this figure to be unreal, there is the likelihood that all the figures and analysis submitted in this article are based on false premises.

this i simple maths. if govt can import dustbin from uk while cant they import fuel for nnpc go distribute to marketters till refinary is fixed instead of telling us cock and bull stories. subsidy is a SCAM!

WE NIGERIANS LIKE DECEIVING OUR SELVES. REASON IS THAT

1. WE SOLD CRUDE OIL CONTAIN MORE THAN 30 UNREFINED PRODUCTS TO BUYERS OUT SIDE NIGERIA(WHO ARE THE BUYERS)

2. AT WHAT RATE WAS THE PRODUCTS( CRUDE OIL)SOLD AND THE TOTAL AMOUNT?

3. NOW WE ARE BUYING BACK JUST A SINGLE PRODUCT OUT OF THE CRUDE OIL AT N130 AS SAID BY THE GOVERNMENT NOW SUBSIDIZE BY N65.

4. IMAGINE WHO IS WHO THAT IS FOOLING OTHERS.

5. GOVERNMENT HAVE TRIED TO BRING BACK OUR REFINERIES BUT FAILED.

6 FEW WEEKS BACK GOVERNMENT SAID THAT THEY DISCOVER ILLEGAL REFINERIES AND WENT AHEAD TO DESTROY THESE REFINERIES.AND THEY


CAN NOT TELL THE NATIONAL ASSEMBLY TO FINE TUNE LAW SO THAT GOVERNMENT CAN TAKE OVER THE ILLEGAL REFINERIES SINCE

GOVERNMENT CAN NOT BUILD THE REFINERIES.NOW ALL CONTACT BAND GOODS ALWAYS BURNT IN THE PRESENT OF MEDIAS IN NIGERIA BUT WE

NIGERIANS HAVE NEVER SEE ANY WHERE THEY BURNT JEEP,CARS. JEWELRIES,LCD,HUMMER JEEP.

7 WHERE ARE WE NIGERIANS. NO JOBS FOR GRADUATES ANY MORE.THEY REPLACE THEM SELVES WITH THEIR CHILDREN TO RULE US.

8 UNFORTUNATE,IMF NOW WHAT TO DICTATES/ORDER US TO REMOVE OIL SUBSIDY THROUGH THE PERSON THAT DO NOT HAVE ANY INVESTMENT

PROPERTY IN NIGERIA.WE DO NOT NEED ANY BODY TO COME AND PUT ANY HARDSHIP ON US. LET THEM RESIGN NOW AND REPLACE THEM.


9.CHINA REFUSED USA TO RULE THEM BUT NIGERIANS ?

10 I PRAY FOR BETTER NIGERIAN.

11. MAY GOD SAVE US ALL.

@Dr Izielen Agbon

I think your argument is flawed because it is premised on the FG "allocating" crude to NNPC at no cost. Why would any govt allocate 450,000 barrels a day worth of crude at $108 per barrel? That amounts to an opportunity cost of 450,000*$108*365= $18bln!!!

Now if NNPC pays Govt full price and then has to come back and sell the fuel at N65, when it is obvious that it has already paid for the crude at $108, isn't that obviously a subsidy? I would appreciate it if you could re- run your calculations based on the refineries purchasing the crude at $108, in addition to your production and transportation costs of $5 and lets see what your calculations would give as the cost of a litre of petrol.

In addition, your production and transport costs scenario is not entirely correct. While I am aware there is a term the IOC's use called unit opex which indeed may hover between $5 and $8, it does not mean the IOC's profit is simply $108- $5. There are other costs to consider. The logic is similar to what obtains in the drug industry. If Glaxo for eg spent $7bln dollars in researching and finally comes up for a drug that cures AIDS, while the actual manufacture of the drug may eventually be $1 a pill, it could be sold as high as $40 a pill. This is because the firm must recover the $7bln spent on R&!! Likewise, the oil industry has a sizeable exploration and capex costs, which must also be recovered alongside the opex!!

However, having said that, it does not mean there are no issues with the removal of subsidy. While it will be painful, I believe it is the right thing to do for the longer term health of the Nigerian nation for the following reasons:
deregulation of the industry will remove the corruption that the same industry is used to perpetuate, all this cabal issue for eg!!
hopefully, increased investment in refineries and the whole petroleum value chain(petrochemicals, refineries etc) will provide more jobs (direct and indirect) for Nigerian educated youth (engineers, technicians, accountants, drivers, cooks etc).
large FDI for these refineries etc could also help stabilise and even appreciate the naira, the way banking consolidation did in 2006-2007.
there will be more technology transfer.
Nigeria and Nigerians will ultimately be forced to be more efficient. We are poorer than many western nations, yet their citizens walk more than we do. When I went to Uk I was mildly surprised how much walking the average European does despite the available infrastructure.
and many more,